An incorrigible Cognitive Dissident

THE EUROZONE IS BUILDING A FIREWALL ON THE HINDENBURG

None of the EU/US analogies for the debt crisis work, because they’re meant to hide, not illuminate.

The word ‘firewall’ has leapt (rather like flames do) from its specialist meaning among geeks to being the saviour of the human race over the last year. But ask people – laymen or specialists – what they think the word means today, and they will either answer “to protect against contagion” or “I’m not really sure”. Most media people see it as some kind of financial stem-cell breakthrough. A frightening proportion of them see it as the thing that came after the bazooka that never was….but they too often see it as a cure-all.

Just to be upfront here about the mixed-up, drivel-riddled nature of this rhetoric, I will summarise the current theory like this: ‘What you do is get some firepower leveraged into the bazooka, and when it’s too late for that, what you have to do is amputate the bad leg, and then borrow a firewall to stop the debtstream from bleeding onto others’. This is a metaphor recipe that’s been in the blender for an hour – but it still looks and smells like sh*t.

First up, the global world created by these clowns has made it impossible to firewall anything in the sovereign debt sector. They know this perfectly well – the Central Bankers, that is – but it is just possible one could sandbag enough banks in one earthly zone in order to stop the knock-on waves caused by the Krakatoa explosion. As you can see, we’ve now moved out of weapons and fire security into measures against the Tsunami aftermath of one explosion….albeit a big one. In my view, that latter analogy is much nearer the mark – but it’s still unrealistic.

We all saw Clark Kentaghi’s double-barrelled blast of dollars (sorry, back in the arms cache again) ‘designed to get lending to the EU economy going’ and we all know that this too is crap, because it was just more bank sandbagging. He’s firing double-barrelled sandbags at a tidal wave, and get the liquidity back on track and create a sandbank. It’s that straightforward.

But it’s too late: the Lehman moment was passed weeks ago. Today’s hot news is this: ECB lends €630bn to 800 banks, those banks then deposit €777 bn at the ECB. That’s more than last week, which was more than last month, which was more than ever before. It’s a new record. But call me wacky, it doesn’t lend itself to the interpretation that wild speculative business lending just got under way throughout the eurozone.Nope, that was 2005.

The politicians don’t trust the people, the Americans don’t trust the Europeans, the banks don’t trust each other, Brussels doesn’t trust the Greeks, and nobody trusts the Germans. Everything now is a thinly-disguised scramble for safety from something nasty falling out of the sky.

Secondly, the EU is, um, a free-trade zone. How do you firewall against economies already burning down to the foundations in at least five EU countries? And what good could that ever do if this Troika thingy insists on making the firewall out of petrol, so that scorched earth is all that remains?

It’s claptrap, the whole thing: cod-scientific and muddled mumbo-jumbo designed to mask an obvious operation going on to save the reputations and balance sheets of the few – but having the unfortunate downside of pauperising everyone else. It’s not meant to make sense: it’s meant to save worthless arses….and that never makes sense. It only ever makes matters worse.

If you find this too much of a generality, let’s take a quick peek at the EU member States in trouble.

Brussels has described the Portuguese austerity programme as ‘on track’. ‘The large fiscal correction in 2011 and the strong 2012 budget have bolstered the credibility of Portugal’s front-loaded fiscal consolidation strategy,’ say the folks in the Troikabunker. No mention at all of the economy: just some vague tripe about ‘headwinds’ in 2012….so let’s get real. The GDP will contract 3.5% in 2012 – at least. As we saw at this stage in Greece, the rate of meltdown is accelerating. During 2011, unemployment went from 10% to 13.6% – 1 in 8. In order to get rid of its debt of close to €300 bn, Portugal has received €52 bn from Brussels and €26 bn from the IMF’s Extended Fund Facility. Being deemed ‘on course’, a further €9.7 billion from the EU, and about €5.2 billion by the IMF, have been handed over.

That’s €93bn of public money in one year spent to service a €300bn debt problem spread over anything from six months to 20 years and more.

It doesn’t make any kind of economic sense for anyone except the banks. And it’s being done – along with everything – to save the banks….and the euro dream that became the long-predicted nightmare….and, ultimately but very clearly, the United States of America.

Mario Monti, that master of self-publicity, says all Italy needs now is some economic stimulation, and she’ll be out of the woods. Well that is, he was saying that until some new Italian economic data came out yesterday. Calling them atrocious is being hard on atrocities: EU car sales were down 4.6% in January; Italian sales plummeted 19.5%. There too, economic shrinkage accelerated in Q4 2011, but the eurocrats say that’s OK because ‘borrowing costs plunged more than two percentage points from a euro-era high of 7.26% on Nov. 25’. Put out more flags. Every day that brings more tax rises and spending cuts yanks the country further back in economic terms, and backwards in its ability to pay that debt.

Spain has asked for its austerity programme to be eased up, so they’re obviously doing really well. Spanish Economy Minister Luis de Guindos told reporters he thought his EU colleagues would “understand perfectly”. Brussels sent a one-word answer yesterday: ‘no’. It’s the same story: acceleration of GDP contraction in Q4 2011, rising unemployment – 115,000 in February alone, over 26% among those under 25 years old – and all budgets are over-budget: the 3% euro-zone deficit limit is expected to overshoot to 4.9% there in 2012: just so we’re clear, that’s over 60% out in the wrong direction. A Madrid spokesperson told me that Spain’s Prime Minister Mariano Rajoy “has no plans to discuss any easing of the programme at the forthcoming summit”, but the senora seemed happy to confirm that Spain had missed all its austerity targets for 2011. I suppose she’d have sounded a bit silly trying to do otherwise, really.

The UK strategy has precisely the same aim, except that in our case it makes more sense: our problem is dire but less urgent, and – by accident rather than design – our austerity has been more a rebalancing than counter-productive. But some of the things the Greeks are being asked to swallow, well…..

Let’s leave Greece for another post: I’m all Greeced out this morning. We’ve all (The Slog included) become obsessed with Greece to a point where the argument about time and date of default has become a pointless pissing contest along the same lines as the Climate Change debate. There are so many imponderables, unknowns, poison pills and impracticalities involved, so many different geopolitical agendas in play, and so many vested interests breaking or spraining the rules, it can only end in tears: the timing and volume of tears are the only things left. But if I may twist the allusion kaleidoscope just one more time, Greece-guessing is like a passenger on the Hindenburg watching his skin burn, and worrying about that nice new set of luggage he bought specially for the maiden voyage.

The eurozone is ablaze, and falling to earth rapidly. It cannot survive with a southern half to it: it was a barmy idea in the first place. We’re being told that a firewall is needed to contain Greek meltdown (pass the blender again) but it’s all bollocks: the plan looks to me like the Clubmeds themselves being detonated to create the tree-gap that ends a forest fire. They are, literally – just as with the Hindenburg – the victims of the most savage and cynical sabotage in economic history.

72 thoughts on “THE EUROZONE IS BUILDING A FIREWALL ON THE HINDENBURG”

A darn good way to end the prospect of war would be end the age old paradigm of the ‘state’ altogether. People don’t wage wars, governments do – normally governments working at the beck and call of interested parties. The ‘people’ are then suckered into it.
The apparent ‘noble cause’ of working towards avoiding the future possibility of global war continues for those acting with the authority of state. We can now all see see the fragility of the EU concept but the forces concerned with this construct are not stupid. They knew ever deeper political union would be essential once this path was taken – this was planned for, caused even to provide the impetus for the next step. They knew people would resist the end of the old paradigm of national sovereignty and so the ‘discarding of the old and formation of the new’ could not be spelt-out publicly.
The idea that war can be avoided by political union, first regionally then globally, is part of the force behind both the EU and the broader drive towards an ultimate global political union. And not just war but through the scientific management of every aspect of human endeavour, from education, health, population control, terrorism, energy, pollution to all that of concern to a state, will be centralised. I have no doubt there are many who see this goal as desirable for the future of humanity. I also have no doubt that this pup has been broadly sold for at least the last 100 years by those entities who seek to use this movement to ever consolidate their global interests regardless of the general benefit to mankind.
As long as there has been states there have been the few winners and there has been all the rest. Why on earth would this forthcoming greatst and most controlling state in all history be any better than any that have gone before.
And who is to say that a global state would not wage war. They would say “but who would a one world government wage war against”. The obvious answer is that war would be against all the people. First a war to form and control the people by means ranging from education and propaganda to maybe genetic determination to ensure a compliant general population type. Secondly to suppress resistance of any sort to any dictate; from the operation of a police state to the mass extermination of the of non-compliant.
Or we could do away with the idea of a state altogether.

Moody’s have cut debt rating of Greece to lowest level, C. Default a possibility. http://www.athensnews.gr/portal/11/53765
“…Under the deal, which is part of a second 130-billion-euro rescue package to claw Greece back from the brink of a disorderly default, bondholders will take losses of 53.5 percent on the nominal value of their Greek holdings, with actual losses put at around 74 percent.

According to Moody’s, “the announced proposal for private sector involvement, a precondition for the provision of further financial assistance from the euro area, would constitute a distressed exchange, and hence a default, on Greek government bonds.”

The rating agency makes a distinction between a distressed exchange – where investors are losing money – and an outright default that is likely to happen when the exchange does not take place. “Both these conditions are met in this case,” Moody’s said…”

When the Eurogroup’s assessment has been finalized and debt exchanges have been completed, Moody’s will re-assess the credit risk profile and ratings of any outstanding or new securities issued by the Greek government.

Moodys’ concludes that “the risk of default even after the debt exchange has been completed remains high,” and any upward movements in Greece’s sovereign ratings after the debt exchange. (Reuters)

Thanks for the Link. Very interesting.
That document is consistent with some other old docs which outline the original reasons for creating a *united Europe* after WWII. If one accepts that the original reasons were honest and in good faith, it could be seen as a noble cause at the time.

But what has happened across Europe since then has virtually eliminated any serious risk of Europe going to war with itself again. Nowadays, European people travel extensively in each others countries, own properties in each others countries and huge trade takes place between the countries. These actions mitigate against future wars.

It’s too bad that the EU political elites are living in the past and still trying to implement a plan that has become grossly outdated and irrelevant. The EU would be better off focusing its energies on job creation, improving trade and deregulation. Perhaps acting as an advisory council, not a Lord and master.

United States of Europe – 1959 statement to the US press
Three European Community Presidents
June 11, 1959

Paul Finet, President of the High Authority of the European Coal and Steel Community
Etienne Hirsch, President of the Commission of the European Atomic Energy Community
Walter Hallstein, President of the Commission of the European Economic Community

PRESIDENT HIRSCH – within his opening statement
… the common market cannot work if there is not a common social policy, if there is not a common monetary policy, and nobody can think of a common monetary policy if it is not calmed by a common political policy. So we feel we are now in a process which with all the difficulties which we will find our load will lead — nobody can say in how long, but will lead inevitably to the calming of this edifice that is the United States of Europe.

Within subsequent questions:-

QUESTION: These questions are directed to Dr Hallstein. Here is a short sweet one. How long will it be before there is a United States of Europe?

PRESIDENT HALLSTEIN: That really is the $64 question, gentlemen.
There will be a United States of Europe, but it’s certainly premature to say when and what exactly its structure will be.

QUESTION: Having achieved the United States of Europe they want to know when your going to start taking in Britain and the Scandinavian countries? When will Britain and the Scandinavian countries join the European communities is what the question really is.

PRESIDENT HALLSTEIN: It’s not only up to the community to decide this. The point we are always making is, that the fact that we have only six member states, it’s not due to the six but it’s due to those who have not joined us.

The pain being inflicted on Greece is because a) the EU elites are out of their depth and don’t know what to do, thereby believing that ever more austerity is the solution and b) their policy actions are limited by a blank refusal to consider Greece ever leaving the EZ, because that would spell the end of their EU/EZ dream of a United States of Europe. It may also be influenced by the rumour of oil/gas deposits which the EU elites would certainly like to get their hands on.

For months now I have been struggling to fathom the logic or reasoning behind the degree of pain being inflicted on Greece.What possible agenda is being served by pushing a population to these levels of suffering and despair.Another mystery which has been floating around for years is the issue of Greece’s abundant yet undeveloped mineral resources,most importantly the rumoured to be enormous hydrocarbon deposits.There has been a great deal of speculation about this matter in the Greek blogsphere and alternative fringe media.And just now I found this on Kathemerini..

DT blog:
“Mr. Van Rompuy is deluding himself if he believes that “ever-closer union” is Europe’s destiny. As Lady Thatcher noted a decade ago in her book Statecraft, the relentless drive to create a European federal superstate is “a classic utopian project, a monument to the vanity of intellectuals, a programme whose inevitable destiny is failure: only the scale of the final damage done is in doubt.” Van Rompuy and his cohorts are steering a ship of fools that is heading for the rocks.“

Re the Belgian Chocolate soldier
He was born in the wrong place too late. Had his folks emigrated to the USSR in 1960, he would have been in charge by 1985.
Lacking the wisdom of Gorbachev, he would’ve wound up dangling from a lamp-post.
I hope he doesn’t in the future, as this would reflect badly on our ability to tolerate the disabled among us.

BT and MaxC
The reason why an earlier threader’s ink to the Slog homepage was banned by the Telegraph concerns some profound home truths about what controlling gargoyles like the Barclay Brothers have been up to.
‘Respect for truth’ – that’s what it’s all about: the Barclays, Rusbridgers, Murdochs, Camerons, and Stalins of this world would have us believe it is relative.
But I’m right – and this IS a Slog original: deny the truth, and the illusion will be sold to the deluded by the delusional. (We are back once again to Lenin’s Useful Idiots)

Will
Correct: this reflects the fact that we are not, as such, bailing out the Greek State at all.
By the way, I note your symbol is La Croix de Lorraine, symbol of the Free French.
Vive la France Libre!

I thought that the article was satirical – tongue in cheek! Surely a mistranslation?? German humour?

“The euro has been a major experiment. A (current) total of 17 countries with many things in common — but also many differences, such as their economies, politics, histories and ways of life — have embraced a common currency.” Many things in common??

“By following this strategy — and despite what are always, of course, the best of intentions — European politicians….

I could go on.

However it does indicate the way the wind is blowing. Maybe the sheeple will eventually turn..

Mr Kaden’s solutions are not based upon practical reality, although his analysis of the issues is pretty good except when he says: “Europe needs a common currency.” and: “The hard truth is that the voters in each country make the final decision about whether to honor or violate treaty obligations, so they also bear the responsibility for dealing with the consequences of their own decisions.” which is complete nonsense. He doesn’t explain which voters in the EZ authorised Mr Draghi to violate EU Treaties by pumping €1,000,000,000,000 into EZ banks.

My view is that there is a lot of useful input that contributors to this site could make to Conshome even though not Cons party sympathisers. What is striking is that bloggers and their followers often seem better informed and more in touch than some of the politicians.indicimm You don’t have to be Conservative to comment, and judgirar

I see we have Herman I wish I was German Von Rumpy Pumpy for another 2 ½ year term as President of the European Council.
He was “unanimously re-elected” despite the fact that no election appears to have been held.
His acceptance speech was nauseous ……

Came across a lovely comment from Prof John Vickers yesterday when he was asked what would happen re the sovereign debt crisis in Europe. His answer was along the lines of : I don’t know, and anyone claiming to know is lying.

Potentially O/T but then again perhaps very germane indeed: the area of the brain that detects bollocks and rebels against it is growing in people all over the world simultaneously, according to new research

As a retired economist, I became interested in the intricacies of the politics and economics of the eurozone about a year ago. I came to the conclusion that ultimately there were only two possible outcomes: the breakup of the eurozone as we know it or the creation of the United States of Europe – a proper country like the UK, the US or Canada – huge political challenges both. The current “fiskal union” seems to be a weak third option which appears to me to be unworkable. It is little more than “a repeat of vows made 20 years ago, but this time we mean it” sort of thing.

We now have a situation where “Bullsh*t Baffles Brains”. I do not think for one moment that the powers that be in Europe think that they are on the right track. I think that the problem is too big for them and they simply don’t know what to do. I really appreciate the likes of JW of The Slog and AEP of the DT for trying to cut through the “bullsh*t and the bollocks” in order to make sense of all of this. I will follow this saga closely over the coming months and years but to keep balance in my life I will continue to learn Spanish here in Canada and Mexico during our winter and go for long-distance walks in France and Spain in the fall.

Thanks John, your blog is and will continue to be my first read in the morning.

I agree about the eventual break-up . It does seem when one analyses events that it is almost as if they are trying to cause economic grief . Certainly the the longer the Euro stifles the Southern economies the worse the final implosion will be . Not sure about the 2012 date though , I think we might have to endure anaother year of this nonsense . The Goldman Shaggers have done an excellent job of buying time , it must be said . Draghi in particular has run rings around Merkeschauble .

@MaxC:
“Honour, probity, respect for truth, self and others, compassion, all seem to be obstacles if you would get ahead in this world.”

Because real wealth is limited. For one person to increase his share of what’s available, he often has to abuse some of those rules. The alternative is to operate a fiat currency where paper money is printed in sufficient quantities – ie inflated – to make everyone wealthy, at least on paper. As we now see that has its limits.

Honour, probity, respect for truth, self and others, compassion, all seem to be obstacles if you would get ahead in this world.
It is hard to see how we could ever build a new, benign socio-economic structure on the back of the situation we have now.

Very European to put in place an expensive defensive line that like previous examples will be declared impregnable, but in reality probably useless. They could call it Maginot, Siegfried or Hindenburg.

It certainly feels like the big moment is nearly here. I’d agree with your opinion John, that Merkel and chums are trying to euthanize southern Europe as quietly as possible. I just don’t think they’ll succeed because France will have to take the bullet as well. Germany will be standing alone by late spring and as the eu breaks apart nobody knows how each newly “freed” nation will cope.

I have a feeling that some will do well, others won’t. If anything, the whole issue is about survival of the fittest. But Angie,Nicky, Rumpy and chums are long past making the rules.

I’ve said it before: outside of politicians, people are resourceful and adaptable. We may all manage to survive and succeed in spite of what these f**ks are trying to do to us.

So why would Germany even want to stay in the EZ? I still think Merkel’s final goal is to get Germany out. She may be captain of the Hindenberg, but maybe she has a parachute? Remember, it’s women and children first.